May 31, 2012

Tip 22-2012: Advantages of Short Sale vs. Foreclosure

Charlottesville Real Estate

Tip 22-2012:  Advantages of Short Sale vs. Foreclosure

Is it better for the owner of an upside down property to participate in a short sale, or to simply walk away with the lender ultimately having to foreclose?  The answer in almost all circumstances is "Do a Short Sale."

The advantages of a Short Sale are: 
  1. A short sale has less of a negative effect on the Borrower's credit score than a foreclosure.
  2. A foreclosure will affect the Borrower's ability to buy another house longer than a short sale.
  3. With a short sale, the Borrower should be able to remain in the house until the lender accepts the short sale (instead of moving out and possibly paying rent elsewhere.)
  4. In a short sale, more and more lenders are allowing the Seller a relocation allowance.
  5. With a short sale, any deficiency can usually be negotiated away as part of the approval.  With a foreclosure, the lender will usually create a deficiency by buying the property for less than the debt owed.
  6. Any Second Deed of Trust will not be paid anything with a foreclosure, while with a short sale, the second lender will receive some money and will probably negotiate a waiver of any deficiency.
  7. Finally, a short sale is simply better for the real estate community, and especially for the specific neighborhood than a foreclosure. Any foreclosure resulting in an empty boarded up house is never good for anyone.  
Although we know short sales can be very difficult to complete, the advantages far outweigh a foreclosure.   

Contact me at 434-951-0858 or if you have questions, or visit our blog below for previous tips.  Thank you for allowing us to send you this email.    

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William D. Tucker, III 
Charlottesville, VA 434-973-7474 | Lake Monticello (Palmyra, VA) 434-589-3636  
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